Tuesday update

SHORT TERM: gap up and go Tuesday, DOW +349

Overnight the Asian markets gained 1.8%. Europe opened higher and gained 1.5%. US index futures were higher overnight. The market gapped up at the open to SPX 1946 and continued to rally. The SPX had closed at 1932 yesterday. At 10am Construction spending was reported higher: +1.5% v +0.1%, and ISM manufacturing was reported higher: 49.5 v 48.2. The rallied continued throughout the day, with small 4-5 point pullbacks. In the last hour of trading the SPX hit 1978, dipped five points, then closed at 1978.

For the day the SPX/DOW gained 2.25%, and the NDX/NAZ gained 3.00%. Bonds lost 29 ticks, Crude gained 60 cents, Gold slid $9, and the USD was higher. Medium term support rises to the 1973 and 1956 pivots, with resistance at the 2019 and 2043 pivots. Tomorrow: the ADP index at 8:15, then the FED’s Beige book at 2pm.

The market had a gap opening for the first time this week, sixth time since the beginning of last week, and the tenth time since the SPX 1810 downtrend low. Ten gap openings in twelve trading days. After closing at the low of the day yesterday, SPX 1932, the market gapped up to 1946 and rallied to a new uptrend high at 1978. This has been quite a rally in just 12 trading days: +9.3%. During the first two uptrends of the previous bear market, the SPX rallied a similar 8.4% in 11 days, and 9.9% in just 7 days. With the Major wave B uptrend now confirmed in all four major indices, we should start looking for it to end soon. At today’s high the SPX has retraced more than 50% of the Major A downtrend, has reached the 1973 pivot range, displays an Int. C nearly exactly 0.618 of Int. A, is quite overbought short term, and is displaying a negative divergence on the daily RSI. Plenty of technicals to start completing an uptrend. Short term support is at the 1973 and 1956 pivots, with resistance at SPX 1999 and the 2019 pivot. Best to your trading the Beige book!

MEDIUM TERM: uptrend

LONG TERM: bear market

CHARTS: https://stockcharts.com/public/1269446/tenpp

About tony caldaro

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283 Responses to Tuesday update

  1. gasman88 says:

    Boy, will this market ever stop or we’re going back to Oct 2015 when V-shape took us to new time high? It feels like it now. spx had 200 point move in 2 weeks

  2. fotis2 says:

    Short at close lets see..

  3. H D says:

    SPX, ‘1987’ is +55 off the low, how ironic

  4. 1973 pivot cleared. next stop 2119 pivot. Still in search of Reality

  5. Just bought SQQQ at 20.70 with the proceeds of yesterday’s sell of 50% of TQQQ. Still holding the remainder of TQQQ.

  6. Jimmy Porter says:

    One last thing….Anyone ever go to investing.com and read the chat area? Makes me thankful that Tony is here and knowing ewt among other things. It’s crazy with how most of them trade. I would have to guess that most of them don’t trade and just say things because if they all trade about 90 percent of them would be broke.

    thanks tony for all you do

    • Jimmy, So, according to you what %age are successful traders? above 90 or below 90?

      • Jimmy Porter says:

        in that chat room 10% are successful or at least have a chance. I am guessing probably 40% are successful could be less or more. I know all my friends I made when I worked in Chicago back in 2001 don’t trade anymore. I am the only one left and don’t plan on going anywhere.

    • stmro says:

      I check in on some mainstream boards sometimes for individual stocks. Those people are small-time gamblers plain and simple. You get people accusing the government, foreign shorters, EACH OTHER of manipulating stocks one way or another when things aren’t going their way. 99% of traders lose money over the long-term.

      • simpleiam says:

        “…You get people accusing the government, foreign shorters, EACH OTHER of manipulating stocks one way or another when things aren’t going their way. ”

        We NEVER get that here!

      • Jimmy Porter says:

        I agree except for the gambler part. I know a lot of people think playing the stock market is gambling and for most I guess it is because they don’t know what they are doing. TO me, the market is a never ending piece of art. She is alive and some people love what they see and others hate it. But if you love it and work hard at it you can have a wonderful life.

  7. Jimmy Porter says:

    I guess if you came into today thinking it would be a trading range you could made a lot of money. I definitely wouldn’t take the reversal candlestick that will most likely form today as a top. Not saying tomorrow won’t retrace at least half of the rally yesterday. I think tomorrow morning will make a small new high (unless it happens by end of day) then sell off. I personally don’t see the top yet. Still need to hit the lower support line one more time then make one more new high then the top will be complete.

  8. steplaland says:

    Any short concern about a bullish weekly macd crossover thatcould happen? I am. This better close lower by end of this week and continue lower next.

  9. spindoc73 says:

    is the entire bear proposal based on a moving average turning over? because if so, it would be necessary to know the time-frame. in tony’s count, this move from 09′ is a wave 1 and therefore the time-frame would suggest that the bear is on in all likelihood. if however, this is the end of an era, then the relevant time-frame could be quarterly or longer.

  10. steplaland says:

    This cup handle on lower timeframes should take us to the targets

  11. gtoptions says:

    Thanks Tony
    Completing an ED of an ED? Should find out soon.

  12. fionamargaret says:

    Is it possible for Romney to join Rubio for a joint run??

  13. uncle10 says:

    Hey Lee. You like low risk ” cheap entries” yes? Buy Nat gas at 1.68 stop at 1.67. target $1.98. risk 1 reward .30.

  14. stmro says:

    We’re in wave 7 of Int C by my count, so this should be done fairly soon. Will be interested to see the NYAD reading at end of day. Also USD/JPY is moving in the opposite direction from stocks, which is odd.

  15. simpleiam says:

    OH SHEET! TRIN is down to 0.37! Won’t be long now….

  16. uncle10 says:

    Thanks Tony.
    Hey I think I spot a DITD pattern on Nat gas futures chart!? haha What do you think Lee? 🙂

    • Lee X says:

      Hey unc

      It could be an Irishman’s DITD considering the season, technically wish his willy was a bit longer (TWSS) but you might pull it off on the Daily ! 😛
      Thanks for the cheap long That is uber cheap and since I will not trade it I expect it to pay you handsomely !

  17. mjtplayer says:

    We finally had a decent volume day yesterday, above average volume. Not heavy volume, but heavier than we’ve had, generally, over the past couple weeks.

    Yesterday’s volume however may have been a one-off as volume today is absolutely terrible. In fact, today is one of the lightest days of 2016 thus far. We’ll see how we close, but very light volume so far.

  18. johnnymagicmoney says:

    Last post of the day

    Things that worry me for being short

    Russell has been relatively strong as of late and if it goes any higher it will break its downward trend line to the upside.

    Oil is moving higher no matter what. Inventory builds are irrelevant right now. It seems like it wants to bust out further towards 40

    After a gagillion percent in the last 3 weeks and up 2 1/2% yesterday the market cant manage more than a 10 handle sell off before buyers come in. BTFD has been in for so long. I see no volatility at all

    Most people on here think this market sells off very soon and everyone except for a tiny few think this is a bear

    Lots of charts of the dominant S&P companies that make up the index are starting to look pretty good now. Everyone’s chart was destroyed and in a few weeks many show a lot of repair

  19. mjtplayer says:

    So far, so good with the potential of the S&P printing a daily evening “star” doji or “spinning top” doji candle today. The close today and where we open tomorrow morning will both be important for confirmation.

  20. tomasso60 says:

    the shadow of 2189 is off the point and figure charts and it sits at the back of mind.
    thanks for all that you put forth

    • fionamargaret says:

      yes, but it also figured in a higher sequence form – also on a hypothetical sequence…
      I should go for a walk….thanks Tomasso – glad about your dog..

  21. Jimmy Porter says:


    If the play is an ending diagonal for this final leg up…do you think it will push your timeline of topping date from this week back a couple days.. Say between Monday to Wednesday. The only reason I am asking is because ending diag take up more time than normal.

  22. James Green says:

    Great Call Mr Caldaro Looks like SPY topped at 198.47 Bears take control from here on out!

  23. johnnymagicmoney says:

    Magnet Man

    Two thousand twenty or forty for some
    Then there are some who beat the bull drum
    Freddie and Glove think the bull is alive
    And the likes of Zoo Woo think this market will dive
    Player and Michael, and the Bull master too
    Just like Zoo Woo think this bear will ensue
    Then there are those who claim its an art
    And claim to know all and squiggle and chart
    I find it quite odd on a free site by Tone
    That there are many on here who won’t throw him a bone
    But we all have our egos and we all say we know
    So I poke with some jest for the infamous Joe
    RC and Gary and Lesson and Lee
    Fiona and Jimmy, CN, and AB
    We all want to make money and that is no joke
    So let’s support all before we go broke
    For me Mr. Magnet I write while I wait
    For this market to fall and the bulls to take bait

  24. johnnymagicmoney says:

    Tony – back to the seven waves ……………………….we had a 10 point handle drop this morning. Could you count 1978 as five and 1968 as six and this as the last move up? That possible?

    • johnnymagicmoney says:

      Furthermore………………is it possible to have 1978, 1968, and 1980 as the final 3 waves?

      • Thanks Tony, I was wondering the same question.

        Haven’t commented in awhile, but while I’m here an interesting thing to note is yesterday’s SPX 5 point gap up to start the month. In the last 10 years there were two SPX monthly gaps more than 1 point that didn’t close intramonth, and they both closed the next month. Those were 2 and 3 points respectively.

        No 5 point SPX monthly gaps left open beyond the month that I can see.

        • Stopping back to correct myself, and this is a brutal correction I realized today. January 2016 (2 months ago) gapped down by 6 points. Didn’t close in January or February.

          January 2012 or so gapped up by 1 SPX point and never closed either. But the idea I’m getting from this realization is that gapping back under 2040 to start the year does look pretty uber bearish, especially since we never revisited.

  25. My last post today:OIL just went up .70 in 2 minutes.Nice job Yellen and PPT.See ya all later.

    • Lee X says:

      Guess you can change ur name to learnedmylesson26 🙂

      • I actually leave off the 7 digits that follow 25.Makes it easier that way.when I learn another lesson.Its now learnedmylesson250000008.Lol.How do you explain a rally of oil on a number like that?

        • simpleiam says:

          XOM having its annual Investors Forum meeting today. They’re discussing plans to cut more Capex; have already cut 25%, mostly personnel. Squawk Box interview w/Tillerson tomorrow.

          • EL MATADOR says:

            Simple, do you know why XOM today still has refuse to take any write downs on its reserves? … I’m just blown away by it … how much longer can they get away with this one is my guess

          • simpleiam says:

            No El Mat, I don’t know, and you’re not the only one asking that question. There are a couple of scenarios which I can’t write about, but who knows. I’m sort of hoping Becky Q. or someone else asks Tillerson that question tomorrow morning. I’m just a grunt, so nobody tells me anything; however, I do over-hear a lot… There’s sometimes a big advantage in being seen, yet not seen.

        • oil going to 40 in correction before starting the leg down. sp inverse HS forming – we break this wedge we go to 2090ish. if markets can fool bulls by going down more always why cant it do the same to bears…time to go short is above 2050.

        • becasue oil has not corrected its 4th wave correction. that happens around 40

        • Lee X says:

          hahaha I changed mine to X for the same reason
          *** got to within a buttermilk biscuit of the Globex low then proceeded to clown hump the “I use mental stops” crowd ?

          *** Warning Hindsight comment

        • frankrizzo31 says:

          Reactions to the same rumor from the Venezuelan minister about a meeting in March. Bunch of schlep rocks.

        • maybe the expectation was for a bigger number

  26. johnnymagicmoney says:

    So when crude is up markets are up and when crude is down markets are now up too. lol

  27. 10 m barrel surplus…cold water splash in the face of oil bulls.Demand now dropping–its obvious.Keep shutting those rigs down boys.

  28. prakashbkc says:

    GM TC sir,
    kindly post wave count from intb as mentioned in earlier post as it not posted in yesterday post

    • tony caldaro says:

      Intermediate wave A unfolded in seven waves SPX: 1836-1822-1888-1875-1931-1902-1947. This could be counted as a double zigzag, or a simple zigzag. The simple zigzag would be the first five waves up to SPX 1931 as Minor a, then Minor b 1902, and Minor c at 1947. Either way it was a corrective advance. Intermediate wave B was a quick three wave decline that could be counted SPX: 1919-1927-1891. Intermediate wave C has thus far rallied in four waves, SPX: 1939-1925-1963-1946. Normally we would expect another seven wave advance for Int. C, similar to the seven wave advance of Int. A. Corrective waves usually unfold in similar patterns.


  29. uas2014 says:

    – div on spx 60min?

  30. ABchart says:

    ES 60 minutes:

    Line in the sand 1976.50
    Bearish to 1960

  31. Jimmy Porter says:

    Good Morning. I have changed my chart based on wave B is confirmed. If you look, wave 1 and 2 have distinct 3 wave structures. You can squeeze 3 waves out of wave 3 as it shows now but I don’t think wave three is complete. We should pull back and then make a small new high then head back down 3 wave manner to complete 4. Then one more advance back up 3 wave structure for final wave for new countertrend high with hopefully a little throw over to finalize the structure.
    The key in my mind is once wave 3 completes we have to first (a) move below top of wave one then head to bottom of trend. If wave 3 makes new high and won’t retrace below wave one the diagonal is void.

  32. ABchart says:

    To Gary Lewis (and all)

    • rc1269 says:

      and importantly…

      “The S&P 500’s price-earnings multiples are about 1.6 times higher than the rate at which analysts expect profits to grow over the next five years, according to data compiled by Yardeni Research Inc. That difference, a version of something known as the PEG ratio that Lynch favored, is close to the widest since at least 1995.”

      • aahmichael says:

        Since we’re all timers on this blog, how does that info help? The market went straight up for another 5 years after 1995. Am I missing something?

        • Holly Silver says:

          Yes you are. It is clear that most analysts have a bias or predetermination on the future. they then use any and all data that supports that supposition to bolster their case instead of using ALL unfiltered data. On domestic front using fundamental analysis there is no indication of a slowdown. Wage growth has always been the precursor for future economic expansion or contraction. the last few months we had unprecedented acceleration in wage and income growth compared to the prior few years trend. Jobs, discretionary income, low commodity costs, low borrowing cost usually spell pend up demand. We should see an acceleration in spending habits going forward. The latest 14 month stock market churn and correction is a reflection of energy price drop and weak overseas demand. No one seems to think that they can actually reverse that trend anytime soon. I believe all major nations will be seen accelerating together in the next 2 years. that should provide a big stock market move. Watch out o the upside for it should surprise most economists. The US market will be responding to all good news from China and EU from now on. that’s where the impetus for growth will come from even as we stay in a slow trajectory higher. I do believe we should hit 2030 on SPX before a decent drop occurs. I believe it would be the last big drop for the next 2 years.

          • aahmichael says:

            I admit to being very ignorant when it comes to fundamentals, and have never been able to utilize that data for purposes of timing within the time frame of the moves that I try to capture. The one thing I think I do understand, though, is that the stock market can’t go up without increased earnings. (excluding Fed manipulations, of course.) Aren’t earnings decreasing?

          • CampFreddie says:

            Thnx Holly and agree.

          • rc1269 says:


            You seem to have a grasp some of the macroeconomic data that doesn’t matter much for markets, and never mention much that does. I also notice that you haven’t once (that I’ve seen) offered any clarification to my challenges to your multitude of false statements and generalizations.

            Such as,
            “On domestic front using fundamental analysis there is no indication of a slowdown.”

            1. Corporate sales have declined for a year. No indication?
            2. Corporate earnings have declined for a year. Nope, still no indication
            3. Manufacturing has contracted for months. Definitely still no indication

            “It is clear that most analysts have a bias or predetermination on the future. they then use any and all data that supports that supposition to bolster their case instead of using ALL unfiltered data.”

            Your posts suggest you fall in this camp.

            Cheerleading either direction doesn’t do anybody here any good. If you believe that we should be bullish on domestic equities, show us some good data – either technical or fundamental – that directly suggests higher equity prices. Saying that in the future there will be China and EU ponies and rainbows and kumbaya isn’t the most compelling argument to enter into a position. Do you have anything other than your personal hopes and dreams to suggest this will happen?

          • magnus1234 says:

            Thnx Holly and I agree. US might be expensive from a price to book value…but EU and emerging markets are not.

        • don’t want to be a stickler but we did have a 22% correction in fall of 1998.

        • rc1269 says:

          aahmichael says:
          March 2, 2016 at 8:47 am
          Since we’re all timers on this blog, how does that info help? The market went straight up for another 5 years after 1995. Am I missing something?

          yes. you’re missing that there wasn’t a single bearish setup in the market in 1995. strong technicals + high valuations = bull can continue for a long time. weak technicals + high valuations = different story.

          • simpleiam says:

            Don’t forget The Fed raising rates again. I didn’t think they would again this year, but I do now. If Jobs are good, considering the auto sales; interest rates didn’t seem to matter. Fed will raise, maybe not this month, but sooner rather than later.

      • tradeanimal says:

        And that is why most companies now report “adjusted” earnings. The real earnings are too low!

        • johnnymagicmoney says:

          My strength lies more in fundamentals so I’ll weigh in on this. There definitely are some positive factors in the US economy but there are so many global risks and so much deterioration outside of the US that whatever “green shoots” there might be here in the end it doesn’t matter if the big black swans come floating this way. Fact One – we are interconnected more than ever Fact Two – the leverage and speed of the markets over accentuate ups and downs now. This is a paradigm shift I think people ignore. You can say deeper retracements are associated with super cycles as Tony points to this one being 50% but since the late 90’s two of the 3 largest price drops in the last 100 years were in the last 20. This I believe has to do with the accentuated price paradigm shift that comes from leverage, speed, technology, hedge funds, awareness (TV, internet), and the prevalence of an ever increasing number of short term oriented retail investors. This adds to the case that the market gets cut in half here (or in most recessions/crisis going forward because of this shift) Fact Three – Only 30% of the world’s GDP is here Fact Four – Europe and China have major issues. Fact Five – Japan, Brazil, Russia are in recession and in some cases in dire straights Fact Five – Much lesser issues outside of the ones that lie in the countries just listed have derailed our markets in the past Fact Six – Central Banks are desperate and doing unprecedented desperate things that are having less and less of a short term impact yet have very negative long term consequences yet its all they keep doing Fact Seven – Corporate profits are negative here and have been for a while now and will be for some time here Fact Eight – you have sovereign debt being downgraded globally all over the place, big high yield risks here, and a bunch of other countries that would be in dire straights if it wasn’t for their central bank life support

          There are a ton of other risks out there I haven’t even mentioned. Optimism is priced into the markets that things will get better but risks are barely priced in. That’s the interesting thing……………fundamentally I look at price as 3 different things. A being the status quo, B being the future positives (positive pricing on positive future values), and C the potential risks (negative pricing on negative future values). Sometimes the future positives are ignored and sometimes the future risks are ignored. Right now the market is giving positive pricing for what is negative future profit growth and hardly adjusting the market negatively for future risks. Risk is barely priced. Risk is like the wolf. Cry wolf cry wolf cry wolf and after a while the townspeople (market) say the wolf will never come. Each time the wolf fails to appear its easier to not price that risk negatively into the market. Central Bankers have helped the negation of the pricing of risk. The Bear Rally is the last time the townspeople unlock their doors and venture into the street at night feeling safe. The wolf is walking down the street right now. The townspeople just cant make out his shadow.

  33. opader says:

    Thanks Tony.
    For WED – MAR 02 2016
    @ 09:20 – Support: 1940, 1925 – Resistance: 1980

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